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As we come to the end of 2012 we find that, like a movie, the
stresses and strains, the thrills and spills and loose ends are
all being tidied up into a relatively happy ending. However, like
any blockbuster worth its salt, there are the odd questions left
open ready to be picked up again in any sequel (2013). 2012 has
seen the resurrection of many dark evils but TMM can't see one
that has actually resulted in the type of global disaster that
many tail hedgers had placed their chips on.

The European Zombie Dawn has not torn the heart out of the EU
leaving it a bloodied corpse as Greece is still in the Euro,
Spain has not defaulted. The US is not in recession, China has
not had a hard landing, Iran hasn't been invaded or closed the
Gulf, inflation hasn't gone hyper through QE and, lo, we are all
alive and well (if you are reading this after 21st Dec).

TMM would like to summarise 2012 as "The Year that cried Wolf".
Tail hedging became a theme that saw premiums rise rapidly,
whether it was straight volatility for tails or the tail risk
products such as CDS. But at the end of the year, though there
was money to be made by cunning tail risk traders ( as there is
with any market that is wildly moving) the underlying events that
these products are designed to insure against did not occur
leaving the net sellers of tail risk the beneficiaries. TMM
have had some interesting debates with friends about tail risk
and we will probably do a post on it soon, but our simplistic
view is that if you bet on a 33/1 horse and the price comes into
20/1 then you have made money irrelevant as to whether the horse
actually wins or not. And this year saw a lot of betting on
ultimate losers.

This is probably going to be the last post of the year from us
but we hope to come back strong in January with our
Non-predictions for 2013 and the marking of the 2012 set. We
can't even remember what they were now and daren't look. For now
we leave you with the 2012 Christmas viewing schedule.

2012 Christmas viewing-

"The Shirakawa Briefing"- Staring Matt Damon. A
tale of intrigue as one man fights to discover ancient policies
shrouded in mystery since the dawn of time. Only he know's the
dark truth and is determined to warn the world of a frightening
new plan being plotted by a mysterious organisation known only as
the BoJ.

"The Fiscal Cliff" prequel
to "Into the Void" - Two climbers have
to overcome bitter personal resentment and hatred stemming from
their disturbed childhoods as political orphans in the House of
Representatives in order to overcome adversity and certain death
as they face the uncontrollable natural forces of budget
control.
O A portfolio manager and his Sovereign CDS holdings are becalmed
in the once stormy seas of the European markets when they come
across a
European Central Bank whose story doesn't tally. The investor
is left on a sinking ship hoping that the central bank's plans
fail and his CDS rescues him before he drowns.

"Big Trouble in Little China" - When an
All-British fund manager Anthony Bolton agreed to take his
funds to the Asian stock markets, he never expected to get
involved in a supernatural battle between good and evil. Bolton's
funds are rich in greenbacks, which make them a perfect target
for an immortal bent system and its three invincible state
structures. Suffering huge losses, how can Bolton's funds now
defeat data that can't be seen.

"Green Card" - A French national leaves
France for tax exile in Belgium to much derision from his
homeland, only to find that a benevolent Russian President is
willing to give him residency with no questions asked.

"Tom 'n' Rog'll Fix it" - Far East dealers
Tom 'n' Rog try to make their own dreams come true by fixing it
for themselves. However their shady activities catch up with them
years later once they think they are immune from capture leading
to huge embarrassment and fines for their employer.
Unfortunately, unlike the other old "fixer", they are not already
dead and are about to face prosecution for their outrageous
crimes.

"Apocalypse Not Now" - A website in
the US is inundated by true believers of the ZH cult expecting to
be rescued by Aliens and long gold positions from a doom writ
large in ancient calendars. However when Greece doesn't leave the
EU, Spain doesn't default, the US doesn't go into recession and
China doesn't have a hard landing, as the ancient prophecies
predicted, they all have to pack up their meagre belongings,
having sold everything else, and trudge back to the realities of
a normal curve with their "tails" between their legs.